But there is another string attached that he was surprisingly receptive to.... I asked him to put away 30% of each paycheque into a savings account and have automatic withdraws of 20% go into long term investments.
I came up with this plan back when I watched the "PRINCESS" episodes that Gail Vaz Oxlade hosts. (If you aren't familiar with her work, get acquainted! She tells it like it is in simple terms and with straightforward strategies how to live within your means, no matter where you are starting from!) One problem that seems to crop up over and over again on Princess is these young people getting used to having 100% of their paycheques as disposable income why they live at home! They get used to it, they take advantage of it and they don't learn realistic lifestyles. They either end up living under their parent's care forever or amassing huge debt when they strike out on their own unprepared for expenses.
Prevention is fairly simple. Show them what a real life healthy budget looks like: (Thank you Gail!)
Tell them how it works.... if you bring home net $2000/month then you shouldn't be spending more than $700 on housing (thats everything about housing, not just rent!), $500 on life, $300 on transportation... you get the idea. The awesome part is the less (%) you spend in one area, the more (%) you have left over to boost another area! There is flexibility to suit your dreams. But one thing that is NOT flexible.... NEVER go more than 100% - that is debt pure and simple. Debt is never free and it takes work to get out of! So the best trick is to really know what you are making and make sure your spending is in line with the income. Not enough money? Two choices: Lower expenses or find a way to make more money. Not rocket science. Hopefully by teaching my son these basic fundamentals he is passively saving up for moving out on his own. It won't be traumatic or life altering in a financial sense because he will be used to it AND he may even be able to afford some household treats like furniture too! LOL
As for the long terms savings... I showed him a great chart explaining compound interest. It's a simple illustration (maybe over simplified?) that has dramatic implications!
Time is on my son's side. Even at crappy rates of return his age is an advantage. I showed him that chart and he wanted to meet a financial advisor to get started ASAP while his expenses are low! (Smart boy)
So... between budgeting realistically and learning how to batch cook (he's a bit slower learning to cook) I think he is well on his way to finding survival skills for the real world!
Good habits to live by. Knowledge is power.